A grade school backed by Mark Zuckerberg is closing its Silicon Valley location after spending $40 million a year

A new kind of school crafted by the minds and wallets of Silicon Valley influencers is struggling.

AltSchool, an educational software developer and network of "micro-schools" with nine locations in California and New York, is shuttering at least one location and is scaling back its ambitious plans for expansion, according to a new report in Bloomberg.

Max Ventilla, founder and CEO of AltSchool, told Bloomberg the startup will shift its focus to licensing educational software to existing schools rather than create new ones.

Ventilla left his role as Google's head of personalization in 2013 to found AltSchool. The network of micro schools, which has headquarters in San Francisco, enrolls between 80 and 150 students at each of its locations and uses technology to tailor its instruction for individual students.

AltSchool charges a tuition fee close to $30,000 per year, but it has been spending about $40 million annually during a period of rapid expansion, according to Bloomberg. The Palo Alto location will be the first to close.

"We know this is tough news that will have a big impact on your family," Ventilla reportedly wrote in an email to parents of children at the Palo Alto school. But the decision is necessary, he wrote, because of AltSchool's "strategy, path to growth and finances."

AltSchool has raised about $170 million from Silicon Valley giants including Mark Zuckerberg, Peter Thiel's Founders Fund, and Andreessen Horowitz.